The retail pharmacy industry is undergoing a significant transition, and independent pharmacy owners who are able to adapt to the rapidly changing trends will find themselves positioned well to profit from some newly created circumstances.
It's been 50 years since the Medicare program was enacted, and since its inception, millions have signed on to this federal insurance program. At last count more than 55 million Americans were currently receiving benefits from the program. Medicare Part D, which went into effect in January 2006, is a prescription drug plan that, according to The U.S. Department of Health and Human Services 2015 Budget in Brief, has more than 40 million participants enrolled, most of whom are seniors, aged 65 and older. It's estimated that seniors fill nearly 30 prescriptions per year at retail pharmacies, compared to only about half that number being filled by individuals between the ages of 19 and 64.
What It Means
With an aging American population continuing to grow exponentially, the takeaway here for independent retail pharmacy owners and managers is to increase efforts to focus on seniors in the community by:
- Reaching out by promoting events at senior centers to help seniors become better informed about their Medicare plan options, especially during open enrollment periods
- Making efforts to build and maintain relationships with doctors and clinics prescribing medications to seniors who may be in a position to recommend using a particular pharmacy
- Developing a store environment designed to appeal to the senior market by providing certain accommodations meant to make seniors' shopping experiences easier, more comfortable, more informational and decidedly consumer-centric
Other Pharmacy Trends
In addition to the steady growth of Medicare recipients in the past few years, there has also been huge growth in the number of Medicare Part D plans that include preferred networks – up approximately 80% from 2011 to 2015. With new criteria now in place for pharmacies to participate in these preferred networks, including important quality measures known as Key Star Ratings. Gaining and maintaining access to these preferred networks is critical if you, as a retail pharmacy owner, are to have access to Medicare Part D patients.
According to the National Community Pharmacists Association, more than 90% of the revenue generated by the typical independent retail pharmacy comes from selling prescription medications. Compare this with the 65-70% reported by most chain store or big-box pharmacies. A new trend sees independent pharmacies giving more attention to additional means of increasing revenue that include the sale of non-prescription drugs and other front-end merchandising, adding new product lines and offering clinical services, such as immunizations and blood pressure readings. These services also provide additional opportunities to counsel clients, recommend non-prescription remedies and upsell adjunct items.
The Most Potentially Profitable Current Trend
Specialty drugs are creating a marked disruption within the retail pharmacy industry, offering both challenges and opportunities to independent drugstores. While only about 4% of prescription drug consumers use specialty drugs, they're responsible for fully one-third of annual drug spending. Specialty drugs make up less than 2.5% of all prescription drugs being sold but, because of their high cost, garner a huge piece of the drug revenue with continued growth calling for estimates of 50% of the total national drug spend by 2020.
Independent pharmacy owners wishing to cash in on this huge market must take steps to become qualified to tap into this specialized revenue opportunity. There are a variety of ways you can become involved in the specialty drug market.
Embrace these current, fast-moving trends and use them to help your business grow to all new heights. The opportunity is there.